U.S. Department of Commerce Recommends Amendments to Statutory Damages Provisions in Copyright Act

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WASHINGTON —A report issued today by the U.S. Department of Commerce recommends amendments to copyright law that would provide both more guidance and greater flexibility to courts in awarding statutory damages. The recommended amendments would ensure continued meaningful protection for intellectual property while preserving the dynamic innovation that has made digital technology so important to the American economy.

The report is a product of the Department of Commerce’s Internet Policy Task Force (IPTF). The IPTF is made up of representatives from the United States Patent and Trademark Office (USPTO), the National Telecommunications and Information Administration (NTIA) and other Commerce Department agencies.

In the report, “White Paper on Remixes, First Sale, and Statutory Damages,” the Department’s Internet Policy Task Force sets forth its conclusions on three important copyright topics in the digital age: (1) the legal framework for the creation of remixes; (2) the relevance and scope of the “first sale doctrine”; and (3) the appropriate calibration of statutory damages in the contexts of individual file sharers and secondary liability for large-scale infringement. In making its recommendations, the Task Force was mindful of the need to protect copyrights effectively while also promoting innovation on the Internet.

“Through extensive public consultations, the Internet Policy Task Force has produced a detailed analysis of important policy issues raised for copyright in the digital age,” said U.S. Secretary of Commerce Penny Pritzker. “Its recommendations will maintain strong and balanced copyright protection while preserving the free flow of information required for innovation and our digital economy to thrive.”

“Ensuring that our copyright policy continues to provide incentives for creativity while keeping up with the world’s technology advancements has been a critical priority for the Internet Policy Task Force” said Under Secretary for Intellectual Property and USPTO Director Michelle K. Lee. “These new policy recommendations are the culmination of many sessions hearing from stakeholders—from publishers and producers to artists to digital entrepreneurs and consumers—and will help the United States’ creative sectors continue to unleash new works and technologies that spur our competitive economic growth."

“We have long advocated a balanced approach to copyright protection in the digital age,” said Lawrence E. Strickling, Assistant Secretary for Communications and Information and Administrator of the NTIA. “These updates will continue to provide meaningful protection for intellectual property and also support the innovation that has fueled unprecedented growth in the Internet-based economy.”

The White Paper recommends amending the Copyright Act to incorporate a list of factors for courts and juries to consider when determining the amount of a statutory damages award. In addition, it advises changes to remove a bar to eligibility for the Act’s “innocent infringer” provision, and to lessen the risk of excessively high statutory damages in the context of secondary liability for online service providers. The report also notes that some concerns raised about damages levels in cases against individuals could be alleviated if Congress were to establish a small claims tribunal with caps on damages awards.

With respect to remixes and the first sale doctrine, the report concludes that the evidence has not established a need for changes to the Copyright Act at this time. The Task Force makes several recommendations, however, to make it easier for remixers to understand when a use is fair and to obtain licenses when they wish to do so. It also recommends the development of best practices by stakeholders to improve consumers' understanding of the terms of online transactions involving creative works. Finally it notes the need to continue to monitor legal and marketplace developments to ensure that library lending and preservation concerns are addressed.

The new report follows up on issues first discussed in a 2013 IPTF Green Paper, “Copyright Policy, Creativity, and Innovation in the Digital Economy,” and is the product of two sets of written comments and five public meetings and roundtables conducted through the following year. The Green Paper provided the most thorough and comprehensive analysis of digital copyright issued by any administration since 1995 and noted the need for further analysis of the three policy issues that are the focus of the new report.

The Department of Commerce established the IPTF in 2010 to identify public policy and operational issues impacting the U.S. private sector's ability to realize the potential for economic growth and job creation through the Internet. The Task Force has reviewed the nexus between privacy policy, copyright, global free flow of information, cybersecurity, and innovation in the Internet economy. It leverages expertise across many bureaus, including those responsible for domestic and international information and communications technology policy, international trade, cyber security standards and best practices, intellectual property, business advocacy and export control.